Nigerians overpay for petrol at N97 a litre

Nigerians overpay for petrol at N97 a litre

...as oil sells below $52 p/b

 

With crude oil below $52 a barrel at the international market, Nigerians are paying N17 extra on petrol per litre, Daily Trust checks revealed.

The current N97/litre of petrol on the template of the Petroleum Product Pricing Regulatory Agency (PPPRA) were calculated based on the $69/barrel. 

Checks by Daily Trust yesterday revealed that the cost per litre of Premium Motor Sprit (PMS), otherwise known as petrol, should cost N80.1k when all the expenses are factored in, despite the additional expenses attached to importation of refined fuel.

The price of Brent crude oil fell for a fourth straight day to $51.12 per barrel yesterday, its lowest level since March 2009. 

Daily Trust findings revealed that the PMS produced by our local refineries should cost N54.6 per litre with current crude price.

The three local refineries in Kaduna, Port Harcourt and Warri have the capacity to produce about 30 per cent on of the total fuel consumed in the country but for now only Warri refinery is doing skeletal operation, while Kaduna and Port Harcourt are not in operation. 

At the moment about 90 per cent of the PMS consumed is imported from Europe and Asia.

Recently the Minister of Finance, Dr Ngozi Okonjo-Iweala, said in her budget speech that “preliminary estimates show that the break-even crude oil price at which the landed cost of PMS will equal our current pump price of N97 per litre so that there will no longer be subsidy is about US$60 pb”.

“It is only when crude oil price (Bonny Light) falls below this level that the pump price of PMS (which includes N15.49 per litre distribution and Petroleum Equalization Fund cost) can begin to come down. The break- even price of crude oil would have been higher were it not for the N15.49 per litre distribution margin,” the minister said.

Source at the PPPRA said the agency is currently reviewing its template to arrive at the final cost of fuel in the country but that does not mean there will be reduction in the pump price of petrol.

The source said the template makes a provision where there will be under or over recovery and if there is over recovery, government is supposed to build the amount to prepare for paying subsidy in the future should that occur. 

The last review of the template by the PPPRA was on December 29th, 2014.